Published on: June 9, 2024, 2:10 p.m.

How SLMG became a force to reckon with

SLMG Beverages Pvt Ltd, the flagship company of the Lucknow-based Rs10,000 crore Ladhani group, has made significant strides in the last few years. The Rs7,500-crore company has emerged as the largest independent bottler of The Coca-Cola Company in India and South West Asia. SLMG’s association with Coca-Cola spans more than three decades, making it a highly successful bottling franchise across Uttar Pradesh and Uttarakhand for the US beverage major.

More recently, the company has also won the bottling franchise rights for Bihar and has commissioned a fully-automated modern bottling facility in Trishundi Industrial Area in Amethi, Uttar Pradesh. The Rs700-crore Coca-Cola bottling plant was inaugurated by Uttar Pradesh Chief Minister Yogi Adityanath in October last year. Earlier in 2018, the company commissioned a state-of-the-art bottling facility at Kursi Road, Lucknow, in record time of around a year.

With seven production facilities in Uttar Pradesh, SLMG, backed by a network of over 1,500 distributors and over 30 warehouses, caters to 1.5 million outlets in Uttar Pradesh and Uttarakhand. It bottles more than 40 million bottles per day. SLMG manufactures and distributes a wide range of carbonated soft drinks, as well as a large selection of non-carbonated beverages, including packaged drinking water.

It operates under a unique business model with end-to-end execution capabilities, spanning manufacturing, distribution, and warehousing to customer management, in-market execution, and managing cash flows for future growth. Coca-Cola provides brands, concentrates, and marketing support to SLMG. In return, SLMG assumes complete control over the manufacturing and supply chain processes, driving market share gains, enhancing cost efficiencies, and managing capital allocation strategies.

The soft drinks market in India is poised for substantial growth. According to ResearchAndMarkets.com, the non-alcoholic beverages market in India was valued at around Rs1,37,700 crore in FY23 and is expected to reach around Rs1,98,600 crore by FY28, expanding at a CAGR of around 7.29 per cent.

“When Coca-Cola re-entered the Indian market 30 years ago, we produced the first Coca-Cola bottle in India and are proud to continue The Coca-Cola Company’s legacy and widen our reach to consumers across our territories. The last few years have been quite remarkable for us as we have significantly ramped up our capacities in order to meet the ever-increasing demand. We aim to be amongst the top 10 bottlers of Coca-Cola worldwide by 2030, pursuing a vision to build a high-performance, future-ready and sustainable organisation,” states SN Ladhani, Chairman and Managing Director of SLMG Beverages.

India growth story

“Coca-Cola continues to believe in the India growth story, which is the fifth-largest market for the company globally and presents a compelling landscape for the beverage industry. The inauguration of SLMG’s facility in Trishundi exemplifies our commitment towards sustainable, long-term business growth contributing towards the national economy. The investments being made by SLMG are steps towards laying the groundwork for our goal of expanding capacities, and our leading portfolio of brands positions us to win in the marketplace,” says Sundeep Bajoria, Vice President, India Franchise, Coca-Cola India.

Buoyed by its recent success, SLMG has earmarked an investment of Rs3,000 crore in the calendar year 2024 to expand its capacity in its existing territories and towards its entry into the Bihar market. In 2023, the company invested Rs2,000 crore in expansion and modernisation.

At SLMG, we have recently increased our capacity to explore the opportunities being offered by the market. Simultaneously, we are also building up our organisational structure and transforming ourselves into a more robust set-up. Towards this end, we have appointed Costin Mandrea as Chief Executive Officer of Coca-Cola SLMG operations,” says Vivek Ladhani, Executive Director, SLMG Beverages.

With more than 25 years of rich experience in the beverage industry, Mandrea brings a wealth of expertise and strategic vision to his new role. He has held key leadership positions in the Coca-Cola bottling system in Western and Central Europe, Russia, and Japan, where he demonstrated expertise in driving business growth through company-wide transformation, sales force operations, customer engagement, and route-to-market strategies.

Mandrea holds a degree from the University of Bucharest and has participated in numerous leadership development programmes throughout his career. His tenure at Coca-Cola has been marked by successful transformation initiatives and strategic leadership roles, contributing significantly to the company’s profitability and market presence.

“With great pleasure, we welcome Mandrea aboard as the CEO of SLMG. His leadership and strategic acumen makes him a perfect fit to lead our company into its next phase of expansion and success. Amidst our accelerated growth phase at SLMG, we firmly believe he is the perfect leader to navigate us towards unprecedented success. With his proven track record and dynamic approach, we are poised to achieve remarkable milestones,” states the SLMG chairman and managing director.

“I am honoured and excited to join Coca-Cola SLMG as its Chief Executive Officer. I look forward to collaborating with the talented team and leveraging my experience to drive innovation and growth for the company,” remarks Mandrea.

Having joined the company on 1 January this year, the new CEO has been spending most of his time in the market, meeting customers and his salespeople. He has also spent much of his time in the facilities, getting to know his teams. “So, it’s an incredible experience. It’s the best place in the Coca-Cola world to be today – India. And Uttar Pradesh, Uttarakhand, and recently Bihar, are role models for what it means to be a strong bottler with an appetite for growth, with clear commitment to invest in technology, in people, and to become a global bottler,” says Mandrea.

“The mandate I am giving to myself and to the team in our first meeting is that we are building the first Indian world-class bottler, a bottler that is made in India and is able to stay at the same table with the bottlers from Latin America, with the bottlers from Europe, with the bottlers from Asia. So, this is what we are doing, and I have full commitment and support from the board.”

The CEO has charted out a two-pronged growth strategy for SLMG. On the one hand, the company will continue to invest in capacity building; on the other, it will look for newer territories to expand the business. After showing impressive performance in Uttar Pradesh and Uttarakhand, the company is now looking to replicate the same in the newly acquired territory of Bihar (from February this year).

Focus on expansion

“A bottler can always grow in a few ways. You can grow organically by executing better in the market, investing wisely, developing capabilities, and fostering innovation. We are fortunate to operate in one of the most dynamic areas of India, which is Uttar Pradesh and Uttarakhand. When you look at the per capita opportunities and the demographics – young, hardworking people – this is exactly our type of consumer. So, we focus on expanding the market here,” explains Mandrea.

“There is another way we can grow and that is by expanding our territory. SLMG had this experience in 2019 when it took on additional franchise territories and implemented its model of investing, executing in the market, and growing people. This was very successful, with great results in terms of market share, revenue, engagement, and retention. From February this year, we have had the privilege to expand into a new territory, Bihar, which is very similar to UP and Uttarakhand,” adds the CEO.

The recently commissioned bottling facility at Trishundi in Amethi, UP, is the most modern in terms of technology and has the largest capacity in SLMG’s portfolio. The facility, with a total manufacturing capacity of 4,600 bottles per minute, was established with an investment of Rs700 crore. This unit has the capability to produce beverages in cans, Tetra Pak cartons, and plastic bottles to cater to varied customer preferences. It also runs a line for packaged drinking water. The company has also announced an additional investment of Rs200 crore for capacity expansion at the same location.

“This is a world-class bottling unit. Even the US does not have this kind of technical facility. Our plant and machinery are the latest, whereas in the US, the plants were set up 10 years ago. So, we have an edge over them,” says Ladhani.

As a responsible bottler, SLMG plans to spend more than Rs100 crore on sustainability, safety, and the environment this year to promote sustainable solutions to combat climate change. Of the total investment, Rs75 crore will be spent on sustainability and Rs25 crore on quality. This strategic allocation of resources demonstrates the company’s intention to be at the forefront of the industry’s sustainability efforts.

“Our investment in quality, safety and sustainability is not just a business strategy but a commitment to a better future for all. We envision a world where excellence and responsibility go hand in hand, and SLMG is leading the way towards this vision. SLMG Beverages Pvt Ltd is a beacon of sustainability, setting the course for a greener, cleaner, and more responsible future in the beverage industry,” says Paritosh Ladhani.

As the chosen bottling partner of Coca-Cola, SLMG aims to become the best-run bottler, celebrated for its inspired team, phenomenal growth story and unwavering commitment to sustainability. This commitment emphasises the company’s dedication to maintaining the highest standards in every facet of its operations. The emphasis on quality and safety fits seamlessly into SLMG’s broader vision for sustainable growth.

In line with Coca-Cola’s global initiative to create a ‘World Without Waste’, SLMG aims to achieve net-zero carbon emissions by 2050. This bold target signals the company’s determination to play a central role in tackling climate change and reducing its environmental footprint.

One of SLMG’s notable initiatives is the deployment of reverse vending machines (RVMs) in Agra. There are currently 12 machines, with plans to add a further 20 in 2024. These machines incentivise consumers to recycle by accepting empty beverage containers, contributing to the circular economy and reducing plastic waste.

Meanwhile, The Coca-Cola Company, the world’s largest beverage firm, remains optimistic about its India business despite a slow start in the first two months of this year. January and February were a bit soft, but business bounced back in the following months of March and April, according to a company release. “We expect India to continue to have a strong year this year,” said James Quincey, chairman and CEO of The Coca-Cola Company, during the company’s recent quarterly earnings call with investors.

Thums Up on top

The firm reported its March quarter (Q1 CY2024) results, with net revenue rising 2.5 per cent to $11.23 billion, ahead of Street estimates of $11.01 billion. Quincey also noted that Indian brands such as Thums Up remained strong in terms of their sales performance in the country. The company has made net gains of $293 million related to the refranchising of its bottling operations in certain territories in India this year. Coca-Cola has refranchised bottling operations in select Indian territories, including Rajasthan, Bihar, and some parts of the north-east, to streamline company-owned and franchise-owned bottling operations in the country.

Earlier, Coca-Cola had announced its intention to reinvest a significant portion of its capital investment into expanding capacity in India. The beverage giant highlighted the substantial growth experienced by its India business in 2023, leading to increased investments aimed at scaling up operations. During a post-earnings management commentary in February, Coca-Cola’s president and chief financial officer, John Murphy, emphasised the company’s commitment to building capacity for its global dairy business, Fairlife, and its Indian operations. Murphy noted that India, along with Brazil, played a key role in driving growth in the Asia-Pacific region.

Coca-Cola reported 2 per cent growth in developing and emerging markets, attributed largely to the performance in India and Brazil during the December quarter. India stands out as Coca-Cola’s fifth-largest market, indicating its strategic importance for the company’s global operations. Murphy underscored the company’s financial strength, stating that they have the flexibility to reinvest in their business for growth while also returning capital to shareholders. In contrast, developed markets experienced one per cent growth, with notable contributions from Mexico and Germany.

Meanwhile, Coca-Cola’s bottling partner in India, Hindustan Coca-Cola Beverages (HCCB), has announced a significant investment of Rs3,000 crore in Gujarat to bolster its manufacturing capabilities for juices and aerated drinks. This expansion is anticipated to be operational by 2026. Recent announcements also include HCCB’s decision to divest some of its company-owned bottling operations in certain regions, signalling a strategic realignment within the Indian market. HCCB is Coca-Cola’s largest bottler in India with 16 operational factories. Coca-Cola has 11 bottlers in India that operate 54 plants across the country.

Amidst all these developments, SLMG has emerged as Coca-Cola’s largest independent bottler in India. The company has made rapid progress in the last few years and has invested heavily in building up the most modern capacities. Both its greenfield bottling plants, fitted with state-of-the-art technology, are world-class facilities and thus have a distinct edge over others.

With other initiatives in place, the company has won the trust of The Coca-Cola Company, as evidenced by its recent acquisition of new territory in Bihar. With all this, SLMG is today a future-ready organisation, backed by its new CEO, and is geared up to tap into the emerging opportunities in the market.